Preferred Stock Has Both a Tax Advantage and a Tax

question 42

Multiple Choice

Preferred stock has both a tax advantage and a tax disadvantage.These two are:

• A)in default there are no taxes and dividends are taxed in corporate hands at 70%.
• B)corporate dividends are taxed on 30% of the dividends received and expenses are deductible.
• C)dividends are not a tax-deductible expense but are 70% exempt from corporate taxation.
• D)dividends are fully tax deductible but are not equity capital.
• E)None of the above.

Apply overhead to jobs using predetermined overhead rates based on various cost drivers.

Differentiate between plantwide and departmental overhead rates and their impact on costing.

Analyze the role of fixed and variable overhead costs in the job costing.

Calculate and understand the significance of manufacturing overhead applied to jobs.

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Definitions:

Variable Costing

A pricing strategy that incorporates only variable manufacturing expenses such as direct materials, direct labor, and variable factory overhead into the cost of products.

Absorption Costing

A method of cost calculation that takes into account all expenses related to manufacturing, such as direct materials, direct labor, and all overheads, whether fixed or variable, in determining a product's cost.

Production Cost

The total cost of materials, labor, and overheads incurred in the production of goods or services.

Per Unit

A term referring to a measurement or cost on an individual item or quantity basis.